Which of the following theories predicts that there can be no sustained rise in real income above the subsistence level?
i. Classical growth theory
ii. Neoclassical growth theory
iii. New growth theory

Question

Quizplus · Accepted Answer

Classical growth theory predicts that there can be no sustained rise in real income above the subsistence level because any increase in output beyond the subsistence level would lead to a corresponding increase in population, which in turn leads to a fall in real wages back to subsistence level. Neoclassical and New growth theories, on the other hand, do not hold this view and instead suggest that sustained economic growth and rising standards of living are possible through technological progress and capital accumulation.

Which of the Following Theories Predicts That There Can Be